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KH spent $400,000+ annual on legal services

Posted: August 5, 2014 4:54 p.m.
Updated: August 6, 2014 5:00 a.m.

KershawHealth spent $428,490 on legal services in Fiscal Year (FY) 2013 and has spent another $466,140 in FY 2014 to date, as of June 30. KershawHealth spent that money on Nexsen Pruet, which has acted as the healthcare organization’s legal counsel for 21 years.

Those costs do not include expenses paid to Columbia attorney David Siddons during a period that overlapped the two fiscal years. The KershawHealth Board of Trustees retained Siddons -- separately from KershawHealth itself -- paying him $11,870 as it negotiated the departure of former CEO Donnie Weeks.

Any future spending on legal services will move over to another firm, Parker Poe, following the board’s recent vote to switch law firms following a request for proposals (RFP) process.

“Clearly, we have undertaken many significant projects over the past few months, and have relied heavily on our legal counsel,” interim KershawHealth CEO Terry Gunn said as part of a series of emails regarding the board’s choice of Parker Poe and past and future spending on legal services.

The projects Gunn referred to include forming alliances with TeamHealth for emergency department services; Orthopaedic Advantage in the hopes of creating a joint replacement center of excellence; and creating a strategic plan that leaves the door open for KershawHealth to enter into strategic partnerships with other healthcare systems, possibly as joint operating ventures, merger or acquisition.

According to Gunn, just why trustees decided to change law firms speaks to an overarching decision to reexamine KershawHealth’s larger contracts for a variety of services. He said a contract subcommittee, chaired by Trustee Derial Ogburn, reviewed contracts that are typically valued at more than $50,000 per year.

“This has been a very healthy process for the organization,” Gunn said. “In the case of legal services, the subcommittee felt it would be good to run an RFP process to make sure we are not only getting the best value, but also to check for the best alignment.

As several trustees did ahead of the July 31 vote, Gunn said that throughout the RFP process “it was clear” the board and KershawHealth were being well-served by Nexsen Pruet and its primary counsel, Jeanne Born.

“But, in the end, after an exhaustive review, the collective wisdom of the board determined that a change to Parker Poe would be the best for KershawHealth at this time. It is too complex a relationship to simply boil the selection to one or two points. It was felt that Parker Poe most closely meets our current needs,” Gunn said.

He said both trustees and administrators enjoyed the professional relationship with Nexen Pruet’s attorneys during the last two decades, even developing friendships he said could survive well beyond the contract.

“I applaud the board for putting personal friendships aside and challenging the organization to stay well aligned with strategic vendors to best meet its current challenges. We look forward to establishing this new relationship and the opportunities before us,” Gunn said.

He said, however, that it is “really hard” to compare expenses between what KershawHealth spent in the past with Nexsen Pruet and what it may spend with Parker Poe.

“The general structure for working with legal firms is on an hourly rate basis, and that rate typically is different depending on the type of attorney being engaged at that moment,” Gunn said. “Further, our industry is such that it is difficult to predict with any certainty the amount of legal representation that is needed from time to time. That said, I’m moving forward with the expectation that we will work closely with Parker Poe to provide proper legal services and efficiently manage the cost of those services.”


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